30 August 2012

It has been a busy week here with the start of the fall semester. Below are a few items that I did not have time to get to, and a few that are in the queue. To get your holiday weekend off to a peppy start, above is a music video from Fun (and I am told that the lead signer is not a moonlighting Michael Shellenberger, though I'm not so sure.)

Nature, which is on a roll this week, also has a thoughtful commentary by Colin Macilwain on UK government science advisers. He writes, "the scientific community's hope that the scientific adviser will exercise meaningful influence is liable always to be frustrated."

28 August 2012

The CIRES Center for Science and Technology Policy Research at the University of Colorado will
celebrate its 10th anniversary on Thursday, September 27.

This all-day
event will include 4 panel discussions and will feature a keynote
address by Dr. John Holdren, science advisor to President Barack Obama.
All events will take place in the Old Main Auditorium on the CU-Boulder campus and are free and open to the public.

There is no other way to read the Australian government's decision other than that Prime Minister Gillard crying "uncle" and punting the issue far into the future. How does this play out? Here are a few initial thoughts:

Gillard gets to say that she never really wanted the carbon tax, and then claim that joining the EU ETS is a step forward;

Abbott gets to claim victory as the carbon tax lasted only 59 days before Labor decided to terminate it rather than transition it to a domestic ETS. The Coalition will have a field day comparing recent Labor claims (e.g., importance of a floor price, C tax as budget revenue) to the new claims (e.g., the Australian Treasury can model the EU recovery and future C price);

The EU gets the prospect of reducing a bit of the "hot air" in its oversupply of carbon credits and can claim some political success due to the high profile decision by Australia to join up;

By eliminating the floor price on carbon that was to be part of the proposed Australian ETS, carbon-intensive businesses have years to hedge and stock up on dirt cheap EU carbon credits and CDM offsets, limiting their exposure to the ETS and guaranteeing BAU, and thus reducing their opposition;

The environmental activist community (including many academics) will either have to put a brave face on what is surely another huge disappointment, or come out fully against this decision. I suspect that we will see a bit of both strategies;

For the first 3 years (from 2015) Australia will treat the ETS as an offsetting mechanism, which is a "one way" use of the ETS. That is Australia can buy credits from the EU but wil not be formally under the ETS.

The proposal is that from 2018 Australia will have full membership in the ETS, which means that unilateral decisions in Brussels could have the effect of increasing energy costs in Australia. If it ever gets this far, then this will be a political nightmare for whomever has to defend it in Australia. Even currency changes could drive price changes. Labor is kicking this can way down the road.

And what won't change? I'll stick with the conclusions that I wrote in a paper last year evaluating the targets and timetables proposed for Australian emissions reductions (here in PDF):

Australian policies for decarbonization could serve as experiments with a clear-eyed recognition that the pace of decarbonization simply cannot be known until those experiments are implemented and evaluated. Departing from conventional wisdom of the international process would take bold leadership and a willingness to clearly explain the simple mathematics of emissions reductions, such as presented in this paper. From this perspective the renewable energy package passed by the Australian government in August 2009 likely offers far more prospects for learning about the practical challenges of decarbonization and meeting aggressive goals for stabilization of atmospheric concentrations of carbon dioxide than does an Australia ETS, whatever its eventual fate. The political challenges thus far facing passage of emissions reduction legislation in Australia, and its almost certain destiny to fail to achieve emissions reduction targets of the magnitude described here, should serve as an important lesson to climate policy makers around the world.

The Australian soap opera provides some clear lessons on efforts to price carbon at a high level to drive behavioral change.

25 August 2012

The image above comes from the ICAT Damage Estimator, a nifty online tool that allows you to compare (soon to be) Hurricane Isaac with historical analogues, including an estimate of what damage those analogues would have caused if they were to hit with this year's level of coastal development.The damage estimates are based on an update to the normalization methodology that we published in 2008. After what could have been much worse in Haiti, Isaac is now turning towards the Gulf of Mexico.

The image above shows all storms that have passed within 75 miles of Isaac's most recent NHC position and where they eventually made landfall. Most went to the west of Florida as Issac is predicted to track. The median historical damage from this set of analogue storms is $1.6 billion, with an incredibly wide range. Currently the NHC projects Issac to make landfall along the Gulf coast as a category 2 storm. There are 5 historical analogues in the set above with normalized damage ranging $1 billion (Georges, 1998) to $4.4 billion (Gustav, 2008). Category 3 and 4 storms have resulted in much higher damage. I'll update these numbers as Issac gets closer to the Gulf Coast.

There is a common misunderstanding out there which makes it difficult for state universities to explain to the public the dramatic effect of state government budget cuts.

The public sees the price of an education reflected in the tuition, the amount that students or their families pay to attend the university. But the price of an education does not reflect the cost of an education. The reason for this is that state governments subsidize in-state students to attend their public universities. Thus, the total cost of an education is reflected in the tuition plus the state subsidy.

The state subsidy is typically hidden and out of sight, meaning that people assume that the tuition (and increases in it) are a reflection of the increasing costs of an education. In a situation where state support is diminishing, tuition must be increased to compensate or costs must be cut or both.

Let me illustrate these dynamics with the case of the University of Colorado, where I am a professor.

So over the 10 years the price of tuition went up by 293% -- inflation only increased 27%. This is a big increase, and certainly increases the burden on those who pay the tuition. However, over that same period the inflation-adjusted cost of delivering that education went down by 14%. How can this be? The simple answer is that the state has cut its subsidy per student by 60% (closer to 70% after inflation), transferring a large portion of the costs of an education from the state to the student. In Colorado at least, state university education is being privatized.

From this perspective, the University of Colorado should be applauded for its efforts to keep costs down over the past decade. This is a message that university administrators should advertise far more widely.

21 August 2012

Passed by Congress in 2005, the Renewable Fuel Standard mandates fuel refiners to blend rising volumes of ethanol and other biofuels. For American farmers, the RFS has been spectacularly effective. Ethanol is expected to consume about 40 per cent of this year’s US corn crop...

In the short term, the Environmental Protection Agency has the ability to issue a waiver to the RFS if implementing it would “severely harm” the economy or the environment. The present conditions amply meet that requirement.

The biofuels industry argues, rightly, that the effect of waiving the RFS might not be immediate or dramatic. Refiners will still need large volumes of ethanol to meet fuel quality standards, so production would not dry up overnight.

RFS requirements can also be met using the tradeable credits known as Renewable Identification Numbers, issued when ethanol is produced. Because there is a substantial backlog of those credits, refiners can use them to meet their obligations rather than demanding physical ethanol, again blunting the effect of an RFS waiver.

Ethanol producers also point out that if output does fall, it will cut the supply of distillers’ grains, the protein-rich byproduct used as animal feed, so increasing demand for other crops such as soya.

Nevertheless, suspending the RFS would probably help ease corn prices – next year more than this. It would also send a signal that the US is not prepared to crucify mankind upon a cross of corn.

But what effect on corn prices might be expected from a waiver of the RFS? Academics at Purdue University affiliated with the US Farm Foundation have tried to answer this in a paper just out (here in PDF).

They explain their quantitative analysis as follows:

A range of possible impacts depends on the price of oil, the price of corn, the magnitude of the drought, the economics of switching away from ethanol, and technical flexibility of refiners and blenders. First, assuming limited flexibility on the part of refiners and blenders in the near term, the impact of a waiver would be very small or nil. If refiners and blenders cannot or choose not to change their current practice of using 10% ethanol blends, then a waiver does not matter. Technical and market constraints would override the waiver.

However, refiners and blenders may have some degree of flexibility in production. This is certainly true the longer the time horizon, so the question is to what extent it is true in the confines of one year. There is not a complete answer to that question, but many of the factors that will determine it are described above.

The next question: What would be the impact of a partial waiver under the assumption that refiners and blenders do have some flexibility in reducing ethanol use and substituting other octane and oxygen additives for ethanol to meet final product specifications? For this paper, estimates were done using a partial equilibrium model developed and used for previous ethanol policy work [5-9]. The model was updated, tuned according to recent observations, and modified for this work on drought impacts. The analysis was done for several levels of partial waiver or use of available RINs in 2013. As indicated above, it is unlikely any waiver will be issued for 2012.

The model for this analysis includes expectations before the drought with a full 13.8 BG RFS for 2013. Then it assumes the drought with three alternative ethanol blending levels: 11.8 BG, 10.4 BG, and 7.75 BG. For this analysis, it does not matter whether the reduced blending levels result because of the use of RINs or a partial waiver. However, the 11.8 BG level could be seen as no waiver and the use of 2 BG of RINs. (Use of some RINs in 2012 and surplus 2013 RINs carried forward to 2014 could limit the 2013 usage to around 2 BG.) The case of 10.4 BG represents 75% of the 13.8 BG RFS and could result through any combination of waiver, use of prior RINs, or use of sugarcane ethanol. The drought may reduce corn production 25% from pre-drought expectations, so EPA might consider a case that could reduce corn ethanol use through some combination of RINs and waiver by that same fraction. Finally, the case of 7.75 BG represents a waiver of 3.45 BG (25% of RFS) plus use of all the estimated available 2.6 BG of RINs, estimated to be the maximum possible ethanol reduction level if economic and technical hurdles could be overcome.

In the graph that appears at the top of this post, I have summarized the data in the last paragraph above (and as shown in the paper's Table 2) for the case of "stronger drought."

The analysis indicates that a partial waiver coupled with use of RINS credits could have a significant impact on corn prices (a reduction of >20%). However, a reduction in corn prices due to such policy action means a cascading series of impacts in the agricultural economic system (and beyond), starting with corn farmers themselves, as as the FT notes, with downstream effects on animal feed and corn substitutes.

Policy makers are fully aware that in the political process acts of commission are sanctioned more severely than acts of omission. Thus, the chances that the US will issue a waiver of any sort in 2012 appear unlikely, though I wouldn't be surprised to see a managed use of RINs and other technical instruments. The Purdue/FF analysis is thus an academic exercise in the short term, but an interesting one nonetheless, and perhaps relevant to efforts to tinker with the RFS down the road.

The California State University system is embroiled in a controversy over plans to admit higher-paying out-of-state and international students to its undergraduate and graduate programs next spring while barring California residents because of state funding cuts.

The issue has become so heated that department leaders on some campuses are saying that rather than turn away Californians, they will not accept any students into their programs.

State budget cuts combined with differential tuition for in-state and out-of-state students is leading universities to act in the direction of their economic interests. The Cal State decision to ban in-state students may be a highly visible publicity gambit, but it does show the consequences of the current incentive structure.

“We need to make appropriate enrollment cuts and that, unfortunately, has to be California residents,” Cal State spokesman Mike Uhlenkamp said to the Times. “If a campus has a program with the capacity to bring in students who are not subsidized and who are paying for the entirety of instruction, they could … bring in additional revenue that could go to benefit state residents.”

Cal State provides more evidence that the days of in-state tuition appear numbered.

20 August 2012

Colorado State University in Fort Collins is proposing to build a new stadium for its football team (visualized above). One of the central arguments for building the stadium is to increase out-of-state applications, the quality of the student body and raise more tuition revenue. A close look shows that the numbers just don't add up.

Frequent readers here will be aware of the dwindling support of university education by the State of Colorado. This leaves a situation where state institutions must figure out a way to fill a gap left by the reduced state support. How this is done is not complicated, as I wrote last year about my institution, the University of Colorado:

In round numbers, the state provides about $3,000 per student. If the state allows the university to charge about $8,000 per student in tuition, and the cost of running the university requires a break-even tuition of about $14,000, then you can see that the result is a loss of $3,000 per in-state student. That adds up fast -- it is a $60 million shortfall.

How does the university make up the difference? Answer: Out-of-state students! In 2010 the proportion of out-of-state students at CU was larger than at any time since 1975 (data, it was 34.5% in fall, 2010 and state law allows it to go to as much as 45%). From 2005 to 2010 the number of CU in-state undergraduates shrunk by 1% while the number from out-of-state increased by 17%.

An interesting twist on this argument comes from Colorado State University, up the road in Fort Collins where my father was on the faculty for about 25 years. At CSU the administration is seeking to dramatically upgrade its athletic program.

[CSU President Tony] Frank has overseen a massive overhaul in the Rams' athletic department. He was dissatisfied with the department's direction, and also increasingly determined to use sports to help raise the university's national profile. The move comes at a time when national league realignment has significantly weakened CSU's conference, the Mountain West, making the highest priority — football prominence — even more of a challenge.

In the wake of a Stadium Advisory Committee's report last week that the controversial project is feasible, Frank said he will announce by early October his recommendation to the school's board about whether CSU should move forward with construction of a 42,000-seat, on-campus stadium. The new facility would replace the 32,500-seat, off-campus Hughes Stadium as the Rams' game-day home starting with the 2015 season.

Estimated cost: $246 million for the core project, planned for the south side of the campus. The SAC, headed by athletic director Jack Graham and school vice president Amy Parsons, said it had "roughly estimated" another $51 million in costs if previously cited features were included, including an alumni center, parking facilities and other buildings.

The stadium is only the tip of the iceberg:

Now Graham is hopeful of not only witnessing the Rams' move into a new stadium, but eventually a buildup of the athletic department budget — from the $23.5 million 2011-12 budget he inherited, to a planned $28.45 million in 2012-13, and to around $55 million a year at some point.

"The rest of this campus knows what excellence looks like," Graham said in his office at the Fum McGraw Athletic Center. "You go to our veterinary school, our agriculture school, our college of business. They don't settle for mediocrity. That is not what the culture's been like in our athletic department the last 10 years. ... I did not come here to babysit mediocrity. We're going to drive athletics to a level of excellence that reflects the standards of the rest of the university."

Frank outlines a vision for athletics in a speech here. One notable feature of the justifications being offered for the new stadium is tuition costs and out-of-state students:

Frank can rattle off stunning numbers about the increases in tuition at public universities over the past few decades, a result of both inflation and a precipitous percentage drop in state support, which traditionally subsidized much of the costs for in-state students. "Over that period, we've essentially been privatizing American public higher education," he said.

If the trend continues, Frank said, state support could completely dry up in the next 20 years. He views his mission as positioning CSU — which has an enrollment of about 27,000 — to withstand that. One move, of course, would be to continue with major tuition hikes, but he speculates that it would require a doubling of in-state tuition to make up for the lost state money. He also scoffs at trying to make up the money through volume, such as increasing enrollment to 63,000. "That doesn't work for CSU; that doesn't work for this community," he said.

A more palatable alternative, he said, is to draw more students paying out-of-state tuition. And higher-profile sports teams, he believes, would draw more national attention to CSU, including from potential nonresident students. "Adding 4,000 nonresident students is $80 million," he said.

That's where the on-campus stadium comes into play, with the country seeing — and the fans attending the games getting — a better feel for the campus itself than if games continue to play be played at Hughes Stadium, which opened in 1968 along the foothills to the west of campus. Frank said a realistic goal could be to add 2,000 to 3,000 in-state students, while pursuing even harder additional out-of-state students.

"The carrying capacity of this campus is somewhere between 35,000 and 40,000," he said. "You've got plenty of room for nonresident growth that maintains the character of the campus."

While there may be good arguments for the building of a new stadium in Fort Collins, the appeal to the tuition gaps smacks of an argument of convenience. Let's take a look at the numbers.

In his presentation of February 3, 2012, CSU athletic director Jack Graham explained that "increasing the flow of student applications is an objective of construction of an on campus stadium" (here in PDF). The relevant slide from Graham's presentation is shown above.

In that slide you see that Graham cites Pope and Pope (2008) to argue that "applications received will increase 2%-8%." Pope and Pope (2008) can be found here in PDF. Here is what they concluded from their analysis:

For basketball, the results suggest that being one of the 64 teams in the NCAA tournament yields approximately a 1% increase in applications the following year, making it to the “sweet sixteen” yields a 3% increase, the “final four” a 4-5% increase, and winning the tournament a 7-8% increase. The impact of the athletic lags, are as we expected. While there is an effect of winning on the current year’s applications, the largest effect comes in the first lag. By the third lag, the effect has usually diminished substantially. . .

For football, the results suggest that ending the season ranked in the top twenty in football yields approximately a 2.5% increase in applications the following year, ending in the top ten yields a 3% increase, and winning the football championship a 7-8% increase. The largest effect is on the current football sports variable along with a small effect on the first lag.

The numbers above are for all universities, public and private, and the study finds larger effects for private schools. CSU is public, but let's set that distinction aside, and place the numbers reported above into the context of actual admissions numbers for CSU.

In 2011 CSU received about 16,000 applications of which about 7,000 were out of state. A top-20 team would therefore boost out of state applicants by 175, a top-10 team by 210 applications and a National Championship by as much as 560 applicants. This boost would be for only one year, after which the effect would disappear. I think it is safe to say that CSU's football successes simply cannot drive large increases in out-of-state applications, even with a national championship every year.

There may indeed be good reasons to build a new stadium at CSU, but increasing student applications, improving the academic quality of the study body and filling the State budget tuition hole cannot be supported based on the evidence provided by CSU.

16 August 2012

Germany’s environment minister Sigmar Gabriel (Social Democratic Party) is pushing for the construction of new coal-fired power plants in Germany. “We need eight to twelve new coal plants if we want to get out of nuclear energy,” Gabriel said on Friday at a meeting of the Mainz-Wiesbaden AG (KMW) in Mainz. With regard to the opponents of the planned coal-fired power in Mainz, the minister said: “Those who demonstrate against coal-fired power will get nuclear power plants instead.” Gabriel said, the decision about which power plants are built is the responsibility of companies and not politics. He added that new coal power plants would not increase carbon dioxide emissions.

First of all, old plants would be closed. In additon, the emissions trading scheme would limit the level of emissions. “You can build 100 coal-fired power plants and don’t have to have higher CO2 emissions,” said the environment minister.

Renewable energies would not be able to close the gap in energy supply that will arise due to the shutdown of nuclear power plants by 2020, said Gabriel. Even gas-fired power plants are not a real alternative because their power generation is expensive and thus not competitive for the energy supply of industrial production.

I had a bit of fun with the highlighted quote. 100 coal-fired plants and no higher CO2? Magic!

German Environment Minister Peter Altmaier said Wednesday the country will need to build more coal- and gas-fired power plants in coming years to ensure energy supplies, even as Germany is pursuing one of the world's most ambitious climate protection strategies. . .

Renewable energies have been booming in Germany in recent years and the renewable electricity production has already exceeded 20% of overall production. But the government has repeatedly said that there needs to be adequate backup power generation capacity to ensure that consumers and, more crucially, industry can be supplied with energy around the clock.

He also said that new fossil-fueled power plants like the 2,200-megawatt facility that RWE built in western Germany are contributing to climate protection goals.

"If one builds a new state-of-the-art lignite power plant to replace several older and much less efficient plants, then I feel this should also be acknowledged as a contribution to our climate protection efforts," Mr. Altmaier said.

A 2.2 gigawatt lignite power plant as a contribution to "climate protection"? Magic!

14 August 2012

Today, I went on a tour of the Svartsengi Geothermal Power Plant near Grindavik, Iceland (pictured above). During the visit I learned that the facility produces >300 megawatts of electricity plus hot water for the region (or about 1/3 of a conventional nuclear power plant). Of particular note is that the plant facility is also home to Carbon Recycling International, a joint US-Iceland company that is actually turning carbon dioxide into liquid methanol fuel.

Our host at the power plant explained to us:

"We don't see carbon dioxide as a pollution stream, we see it as a resource."

The use of methanol as a fuel additive in Iceland is limited by regulations, however, the Svartsengi production has potential to increase dramatically and a second plant further north is in the works. Presently, only 10% of the carbon dioxide released by the Svartsengi power plant is used by the co-located methanol facility.

Benedikt Stefánsson, Manager of Business Development at Carbon Recycling International (CRI) which operates the only methanol plant in the country at Svartsengi in Grindavík, says present regulations do not assume higher than 3% methanol mixed with gasoline. Iceland, however, is committed to increasing the country's fuel consumption coming from renewable fuels to 10% by the year 2020. Changes are being made in this regard and Benedikt is hopeful these changes will be a step in the right direction. It is possible to produce 5 million liters of methanol in the Svartsengi plant.

´´We have also been exploring the possibility of producing 40 to 80 million liters from waste [CO2],'' he says. "Additionally, it´s possible to produce much more with electricity. Indeed, there are already projects in place in the energy sector which could allow us to produce fuel to meet the total demand.´´ The fuel consumption of the entire car population is around 350 million liters annually.

The power plant official we spoke with even spoke of an export market for Iceland for methanol. What seems clear is that energy innovation is moving ahead on many fronts, many of which are quietly out of sight, unless you are looking. In Iceland, carbon capture and "recycling" is now taking place. Can it be done at larger scale at economic returns? It bears watching.

However, due to government polciies increasing amounts of corn are diverted to ethanol production. The graph below simply shows the difference between the two curves above.

For 2012, if ethanol production were to occur at 2011 levels, then net corn production would drop to 5.8 billion bushels, the lowest since at least 1993. Without the ethanol mandate this year, US corn production would be at an all time high.

Why is corn so expensive? The answer does not seem difficult to understand.

09 August 2012

UPDATE 10 Aug: After I tweeted this post to CU President Bruce Benson, he sent around this tweet:

Work by University of Colorado faculty garnered $815.3 million in sponsored research funding in fiscal year 2011-12. ow.ly/cRROL
— CU Bruce Benson (@CU_Bruce_Benson) August 10, 2012

Universities are political entities. A state university like my own receives (very little) funding from the state legislature. Federal research priorities impact our programs, and sometimes, believe it or not, universities play the earmark game. So the need for a staff of lobbyists is part of the reality of the modern university. However, the goings on reported in The Daily Camera today raise some questions about how Colorado handles its lobbying resources.

I used to serve on CU Federal Relations Advisory Committee -- until I resigned in protest (more on that below) -- first, let me discuss the news reported today in The Daily Camera.

At CU, three highly paid employees responsible for lobbying on behalf of the school, including the head of government relations, have collected hundreds of thousands of dollars in recent years lobbying for outside clients.

Tanya Kelly-Bowry, the university's vice president for government relations, is paid $175,000 salary and provided benefits including health and life insurance, vacation, sick leave and retirement programs, while technically being classified as a part-time employee. Kelly-Bowry oversees the university's nine-person government relations team, and has permission from CU to take on other lobbying clients through her firm, Policy Matters LLC. Last year, as president of Policy Matters, Kelly-Bowry was paid $180,000.

Part-time? $175,000 salary? Her own firm? Another salary of $180,000? Nine-person team? Wow, the federal relations group must be good and the university must be able to demonstrate their value.

Well. how does the university justify the arrangement?

[CU President] Bruce Benson said Kelly-Bowry's contract is justified by her performance and she brings in a sizable amount of federal money.

"We want results," he said.

Unlike the University of Oregon, whose federally sponsored research money tops out somewhere around $125 million, CU picked up more than five times that amount this year, almost $683 million.

Whoa there!

Let me explain that of the $683 million in externally-sponsored research awarded to CU none of it results due to the universities high-priced lobbyists. Zero. Zilch. Nada. That money is raised by individual faculty who write grant proposals to secure funding, almost all of which is in competitively-awarded programs. Does federal relations bring in a "sizable amount of federal money?" Excuse me, but I don't believe it.

How do other Pac-12 schools compare in their lobbying?

The associate vice president for political and government affairs at the University of Oregon, Betsy Boyd, is a registered federal lobbyist who works from the school's main campus in Eugene.

Boyd said she can't imagine a scenario in which she, or any other university employee, would be able to take on outside clients while lobbying for the school.

"There would be a whole lot to figure out there," she said.

The University of Washington has a two-person staff based in Washington, D.C., and neither of the federal relations staffers are doing any work outside of their university responsibilities.

University employees can take on outside work, but only after submitting forms asking permission from their supervisors. Even then, that work would be limited to no more than one day a week, a spokesman said. . .

Another of CU's peer institutions, the University of California at Berkeley, has a department of government relations on campus, but none of the employees there are registered federal lobbyists, according to David Trinkle, the school's director of federal research development.

The University of California system has an office in Washington that includes a number of federal lobbyists, but Trinkle said it would be rare for those employees to lobby on behalf of a specific school.

So the federal relations infrastructure at CU is clearly unlike that of its peers.

What separates a good university from a great university? According to Michael Crow, president of Arizona State University, "The great universities are in charge of their own destinies and they know it. And they advance their ideas to everyone who will listen to them to acquire the resources necessary to implement their ideas."

Here at the University of Colorado at Boulder, we have many opportunities to serve as a national leader in creating the 21st century university. One such opportunity lies in how we handle academic earmarks. However, on academic earmarks, CU-Boulder is a follower rather than a leader, which has the effects of wasting limited campus resources and contributing to bad policies at the campus and national levels.

Academic earmarks refer to federal funding obtained outside the normal process of proposal and peer review that most researchers are familiar with. The late Congressman George Brown, D-Calif., who was a tireless champion of scientific research, described them as follows: "Earmarks are the result of an academic institution using its special access to an influential member of Congress ( with access often facilitated by a high-paid lobbyist ) using this advantage to gain a cash award without having to compete for the money or bear public scrutiny. The public and the taxpayer are the real losers as a result of this practice."

Why do universities seek federal earmarks? Well, for one, there is big money available. In 2006 almost $2.5 billion in earmarks were distributed to universities. With budgets tight everywhere, and overall federal research funding peaking after years of increases, it is understandable that universities around the country might try for the easy payoff of a congressional earmark. CU-Boulder is no different.

Last week I resigned from the campus's Federal Relations Advisory Committee ( FRAC ), chaired by Susan Avery, vice chancellor for research and dean of the Graduate School, over the campus policy -- or lack thereof -- on academic earmarking. For much of the past year I, along with the support of several colleagues, have pressed the FRAC to develop and seek adoption of a formal policy on academic earmarking, in order to clarify what is a murky, behind-the-scenes process that operates in far-too-ad-hoc of a manner for a university seeking excellence. The draft policy that we developed does not forbid earmarking, but it does state that "it is the general practice of the University not to seek and/or accept Congressionally directed or `earmarked' funds, except under specific, well-defined circumstances." The "well-defined circumstances" are clearly described in the draft policy. In effect, the policy would change earmarking from a proactive to a reactive process, which would occur only in rare instances when exemptions to the general practice are met.

But when I learned last week that the campus was going to ignore this draft policy in hot pursuit of federal earmarks again this year, I decided that it was in the best interests of all involved for me to simply resign and make my case to the university community outside of the FRAC. There are three reasons why I think that the current CU-Boulder approach to academic earmarks is deeply flawed.

First, the obsessive focus on earmarks is a waste of our collective time and resources. Over the past three years, earmark funding represents about 0.2 percent of externally-supported research on the Boulder campus. This is trivial. From a cost-benefit perspective alone, the focus on earmarks is inefficient. Consider that the campus would receive more additional research funding simply by winning one to two additional competitive grants each year. Given the admirable success rates of CU faculty in securing external funding, this would only mean submitting a total of five to 10 more grants on an annual basis among its 1,000 faculty members ( and 1,500 additional members of its research staff ). Our federal relations efforts would be far better spent on activities like ensuring that each member of the Colorado congressional delegation is invited to campus each year and warmly received, on providing grant-writing support and training for faculty who prepare the grant proposals that provide 99.8 percent of campus sponsored research, and by facilitating the interaction of campus researchers with agency officials in Washington, among many other worthwhile activities.

A second issue is that the focus on earmarks contributes to pathological national science policies. In my short time spent in George Brown's office in 1991, I became convinced of the merit of his views that academic earmarking does far more for members of Congress than for the scientific enterprise. For more than 20 years the American Association of Universities has -- with little success -- sought to stem the tide of academic earmarking. Former Congressman David Minge, D-Minn., wrote in 2001 that academic earmarks are "vicious prostitutions of the political process that are practiced on a bipartisan basis," a view widely shared among scholars and observers of science and technology policy. To the extent that CU-Boulder contributes to pathological academic earmarking, we are contributing to federal science policies that eat away at academia-cherished principles of peer review and accountability. By taking a leadership role, CU-Boulder could perhaps help in some small way to correct this policy failure. In any case, the economic benefits of taking a leadership role would far exceed any financial loss resulting from an earmarking policy that limited the ability of CU-Boulder to pursue earmarks. Consider that in 2006, 99.98 percent of academic earmarks went to institutions other than CU-Boulder.

Third, even for the minority who might reject the argument that earmarking is bad science policy, our current on-campus approach is still left wanting.

Who among us gets to pursue an earmark? By what criteria are earmark opportunities selected and scarce university resources and political capital devoted to pursuing them? How much time and money is spent on campus to pursue earmarks? If you don't know the answers to these questions, then you are not alone. I have spent the past two years on the FRAC and the answers to these questions still remain unclear to me. Absent transparent policy and procedures for earmarking, CU leadership leaves itself open to perceptions of cronyism and favoritism, irrespective of the reality. At a minimum, the lack of a formal campus policy governing earmarking works against equity, accountability and openness.

CU-Boulder strives for excellence. But excellence is unlikely to result if we are following rather than leading. Achieving greatness demands that we clearly define our values and what those values mean for our actions. On the issue of academic earmarking, CU-Boulder has an opportunity to lead the nation. Or we could follow the crowd simply because it is the easy thing to do. We are in charge of our own destiny, and we know it. But are we a good university or a great university?

06 August 2012

The heady days of early 2009, when advocates for global action on climate change anticipated world leaders gathering later that year around a conference table in Copenhagen to reach a global agreement, are but a distant memory. Today, with many of these same leaders focusing their attention on jumpstarting economic growth, environmental issues have taken a back seat. For environmentalists, it may seem that climate policy has dropped from the political agenda altogether.

They're right. The world's biggest emitters have reached a consensus of sorts, but not the one hoped for in Copenhagen.

Please head over there to read the rest, and then please feel welcome to comment there or come back here. Questions/critique welcomed.

Note: Richard Tol, an economist at the University of Sussex, has a new paper out on carbon taxes, with important implications for policy. He graciously agreed to write up this guest post with an overview of the paper and a discussion of its implications. Reactions and questions are welcomed in the comments.

There are regular calls for stringent climate policy. Long-term targets are cheap talk. It is not clear how stringent climate policy can be in the short run. Norway has had a $21/tCO2 carbon tax for two decades. Australia is having difficulty introducing a similar tax.

To provide some structure to the debate, in a recent paper (pre-print), I define and estimate the Leviathan tax. The state would grow, relative to the rest of the economy, if the carbon tax would exceed the Leviathan tax. The Leviathan tax is the maximum carbon tax that is budget-neutral. That is, all other taxes are reduced to zero and replaced by a carbon tax.

The Leviathan carbon tax equals the total tax take times the inverse of the carbon intensity of the economy. I used the World Bank’s Development Indicators. Economic data are in constant 2000 US dollars, using market-exchange rates. Carbon dioxide emissions are for fossil fuel combustion and cement production only. I used data for 2005, the most recent year with almost complete coverage. Data and graphs are here.

The Leviathan carbon tax is less than $1/tCO2 for Liberia and Nigeria. Both countries collect less than 1% of GDP in taxes, getting most of their government revenue from state-owned oil companies. The Leviathan carbon tax for Iran and the Ukraine is $23/tCO2, $29/tCO2 for China, $36/tCO2 for Russia, and $45/tCO2 for India. The Leviathan carbon tax of the USA is $223/tCO2, $353/tCO2 for Brazil (recall that land use emissions are excluded) and $855/tCO2 for the UK. Iceland’s Leviathan carbon tax is the highest at $1367/tCO2.

What does this imply? Following the results of EMF22, a stabilization target of 650 ppm CO2 equivalent would require a 2015 carbon tax of $6/tCO2e, in all countries, on all emissions, of all gases. The carbon tax would rise over time with the interest rate plus 0.6%. A target of 550 ppm CO2e would require an initial tax of $29/tCO2e, and a 450 ppm target would need an initial $149/tCO2e tax.

If the carbon tax is $6/tCO2e, its revenue would exceed 100% (10%) of total tax revenue in countries that account for less than 0.5% (3.5%) of total emissions. In countries representing 73% of emissions, the carbon tax would yield less than 1% of current revenue. This is fiscally feasible.

The revenue of a $29/tCO2e carbon tax would exceed 100% (10%) of total tax revenue in countries that account for almost 2% (21%) of total emissions. The carbon tax revenue is greater than 1% of total revenue in all countries.

For $149/tCO2e, the carbon tax revenue is greater than 100% (10%) of tax revenue for more than 10% (100%) of emissions. Yet, this tax would lead us to 450 ppm CO2e, with a fifty-fifty chance of meeting the 2°C target.

Such a tax would imply a substantial extension of the government budget, even if all other taxes are abandoned, in China, India and Russia. Two-thirds of the US tax take would be from carbon. This is unlikely, and may be unwise. Fiscal experts agree that the tax base should be diverse.

Even a $29/tCO2e, and hence the 550 ppm CO2e strains credibility. Almost 100% of China’s tax revenue would be from climate policy, and almost two-thirds in India. If these countries impose a lower tax, other countries would have to levy a higher tax if the target is to be met.

There are a number of caveats. Carbon taxes have played a minor role in abatement policy, but other instruments can be associated with a carbon tax that has an equivalent effect on emissions (and necessarily a higher cost). The economy’s carbon intensity tends to fall over time, and would fall faster is climate policy is successful. On the other hand, I omit land use emissions and other greenhouse gases. I ignore wider economic effects, which could be quite substantial if all other taxes are abolished. I neglect distributional effects. Carbon taxes are regressive, and the maximum permissible tax would be lower if there were constraints on both the total revenue and the impact of the income distribution.